State reports surge in EV incentives; programs ran short of funds and low‑income targeting rose

Patrick Farti of the Agency of Transportation briefed the Senate Transportation committee on the status of Vermont’s electric‑vehicle incentive programs and said rapid uptake exhausted some program funds in October.

Farti said the state has modeled vehicle targets for meeting the Global Warming Solutions Act and that incentives are an important component of increasing battery‑electric and plug‑in hybrid registrations. “We did run out of funds in October,” Farti said, describing a sharp increase in redemptions last summer and early fall that exceeded earlier projections.

Why it matters: the availability and design of incentives affects consumer choices, dealer offers and how quickly lower‑income households gain access to electric vehicles and e‑bikes.

Farti summarized the suite of programs authorized by statute and session law: incentives for new plug‑in electric vehicles (PEVs), MileageSmart, Replace Your Ride, an e‑bike incentive and an electric utility/municipal fleet incentive. He said combined legislative appropriations and program changes since 2019 total roughly $27 million for vehicle incentive programs, with the 2022 transportation bill providing about $12 million for new PEV incentives and $3 million each for MileageSmart and Replace Your Ride.

All of the state’s incentive programs are income‑sensitive, Farti said. “All of our incentive programs are income sensitive with the exception of electrified utility,” he said, meaning the largest per‑household incentives have been directed to lower‑income households and SNAP‑eligible recipients. The e‑bike program was redesigned from a rebate to a voucher system to keep purchases in‑state and to direct more funds to cargo and adaptive e‑bike purchases.

Farti and committee members discussed how federal policy and dealer behavior affected demand. He said changes in federal tax credits under the Inflation Reduction Act and dealer advertising of low‑monthly‑payment leases helped produce a surge in applications; in some months lease transactions dominated incentive redemptions. “Once the dealers figured that out, they started advertising prehabit. That's why you saw that $4,000,000 get spent very quickly,” Farti said, describing dealer‑promoted lease deals that stacked state incentives with federal tax treatments for leases.

He also described policy interactions that affect which vehicles qualify for federal credits: new battery and critical‑mineral sourcing rules narrow the list of vehicles eligible for full tax credits, while leasing arrangements sometimes qualified under different IRS interpretations. Farti noted that the Inflation Reduction Act’s point‑of‑sale and direct‑pay options change who can receive credits, including tax‑exempt organizations and municipal fleets, if vehicles meet the IRS requirements.

Program design changes in mid‑2023 raised Replace Your Ride maximums from $3,000 to $5,000 for many households, and the agency prioritized SNAP‑eligible and other lower‑income applicants for the largest awards. Those changes, Farti said, drove increased uptake in Replace Your Ride and in the new‑PEV program until funds were exhausted.

Farti said Vermont has roughly 17,000 plug‑in vehicles as of the latest available data cited in the presentation, about 10,000 battery‑electric vehicles and 7,000 plug‑in hybrids, and that Vermont ranks highly in charging ports per capita. He said updated quarter‑four data would be available soon and the agency was pursuing federal grant opportunities to replenish incentives.

Less critical details: the e‑bike voucher redesign increased in‑state retail redemption and cargo/adaptive e‑bike purchases; the state experimented with mobility‑card options as an alternative to vehicle purchase vouchers.